Alitalia Plans to More Than Double Size of Capital Hike
Alitalia SpA needs a bigger capital injection than previously estimated, as management works to secure a package approaching half a billion euros ($676 million) to keep the airline afloat, trade union executives said.
The measures include a capital increase of as much as 300 million euros, three times the amount the carrier had sought earlier, according to the union officials who met Chief Executive Officer Gabriele Del Torchio yesterday. The government is involved in the salvage mission, with potentially just days remaining to avert a collapse, they said.
“Del Torchio said the company may go bankrupt in a few days,” said Franco Nasso, general secretary of the Filt Cgil trade union. “The government should intervene urgently in the next hours with a state entity” that would buy a stake.
Italian Prime Minister Enrico Letta is making a last-ditch effort to save the airline that’s suffered mounting losses and dwindling cash reserves. Compounding Alitalia’s woes is a threat by energy company Eni SpA (ENI) to halt fuel supplies in two days unless Alitalia shows it is able to continue operations. Air France-KLM Group (AF), the biggest shareholder, has been reluctant to take on the role of savior in a rescue operation.
An Italian state entity may join existing shareholders, including Air France-KLM, in the capital increase by investing 150 million euros, Claudio Tarlazzi, secretary general of the Uiltrasporti union, told reporters after the meeting in Rome.
Poste Italiane SpA, Italy’s state-owned postal service, may be involved in a deal, said two people familiar with the matter, who asked not to be named as the plan is private. CEO Massimo Sarmi took part in the talks, they people said.
Alitalia’s board, originally scheduled to meet in Rome at 5 p.m., will convene tomorrow, a spokeswoman for the company said. The government is seeking a solution before the comapany’s board meeting, said three people familiar with the matter. The company is also trying to secure a bank loan of as much as 200 million euros in additional financing, they said. Officials at Alitalia and Air France-KLM declined to comment.
The carrier said after a meeting Oct. 8 that it needed more time to define rescue measures. Italy’s aviation authority also summoned the executives to a meeting today and said afterwards that the company displays “economic-financial stress,” while there are “positive signs’ regarding the airline’s operations security, according to a statement.
Alitalia’s board on Sept. 26 approved a capital increase of least 100 million euros because its cash has dwindled following the heavier first-half net loss. The priority is to resolve the cash shortage through new financing and a capital increase before combining with an international player, people familiar with the proposed rescue plan have said.
Letta is pushing for a state-controlled company to invest in Alitalia and ease a combination with Air France-KLM or another carrier, people familiar with the effort said this week. Government Undersecretary Filippo Patroni Griffi said yesterday that the government is evaluating Alitalia’s situation.
‘‘It’s a serious problem for the country and we are discussing it,” Griffi said.
Air France-KLM said last month that it needs more information from Alitalia before it can decide its next move. The French carrier is under pressure itself to cut costs, and its French subsidiary plans to eliminate 1,826 ground-staff jobs through voluntary employee departures to address weaker demand.